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R1 to Go Private in $8.9 Billion Deal with TowerBrook, CD&R

BARCELONA, SPAIN - NOVEMBER 11: A nurse works with the computer in the ICU on November 11, 2020 in Barcelona, Spain. Clinic Hospital's ICU Unit has a capacity for 48 beds and half of it is occupied by patients with coronavirus. Also, 30% of the total capacity of the hospital is occupied with patients with coronavirus. The activity in the Hospital is at 90%, with a 10% left for visits and delayed surgeries. (Photo by Cesc Maymo/Getty Images) (Cesc Maymo/Photographer: Cesc Maymo/Getty I)

(Bloomberg) -- R1 RCM Inc. will be acquired by TowerBrook Capital Partners and Clayton, Dubilier & Rice for $8.9 billion in an all-cash deal.

TowerBrook currently owns a 36% stake in R1, a company that helps hospitals optimize their billing and other payment functions. Outstanding shares will be acquired for $14.30, an 11% premium to its closing share price Wednesday. 

The deal to take R1 private is expected to close by year-end, the companies said in a statement. It has been evaluating strategic alternatives since March, shortly after New Mountain Capital disclosed interest in acquiring the firm.

R1 shares gained 8.9% at 9:46 a.m. in new York.

The proposed purchase price is a 29% premium from R1’s closing price before New Mountain’s interest became public, the companies said. The $8.9 billion enterprise value deal will be financed with a mix of committed debt and equity from the buyers.

The acquisition shows the rising importance of companies that help US hospitals gain a financial advantage in their dealings with insurers and government programs that pay for health care. The industry, known as revenue cycle management, is estimated to generate $155 billion annually, according to Grand View Research.

R1 has more than 3,700 hospital clients and manages more than $1 trillion in revenue for hospitals and other providers, according to a company filing.

(Updates with opening shares in fourth paragraph)

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